Consumption tax hike based on manipulation of statistics should be revoked

January 26, 2019

Akahata editorial (excerpts)

The Labor Ministry has published the corrected results of the monthly labor survey which were recently found to have been falsified for years, and admitted that the growth of workers’ wages in reality was smaller than the figures published. The Abe government has lost the basis of its decision to increase the consumption tax rate to 10% in October as the decision was made on the assumption that wages are rising and the economy is on a recovery track. The consumption tax with its regressive nature is criticized for slowing down the economy. An increase in the tax rate is, in the first place, the worst economic policy possible, delivering a devastating blow to people’s livelihoods and the economy overall. In addition, the tax hike decision itself was thrown into question. The Abe government has no reasonable reason to go ahead with the planned tax increase.

After the Labor Ministry made downward corrections to the monthly labor survey results, the year-on-year growth of total cash earnings (nominal wages) became smaller than the previously-published figures in each of the eleven months from January 2018. The growth of inflation-adjusted wages was also more modest than the pre-correction figure in each of the eleven months except for September. It is certain that in a revised publication of the 2018 monthly survey data, workers’ wages will show a negative growth.

The Abe government has justified the planned consumption tax hike in October by saying that judging from the wage growth, Japan is experiencing the longest economic upturn since WWII. However, the growth in wages was a fabrication and in reality, wages suffered a decline. The Abe government no longer has data supporting the tax hike plan.

In parliamentary deliberations held during the Diet recess, the Labor Ministry’s internal investigation of the manipulation of the monthly labor survey results was criticized as unethical and self-justifying. The allegation that the ministry tried to cover up the scandal of data falsification has surfaced. Thorough fact-finding efforts, including the summoning of former labor ministers to the Diet, are essential.

Of 56 fundamental statistical surveys having a highly public nature, 22 were found to have some kind of statistical manipulation. This indicates how sloppily the Abe government has been handling statistical data. Government statistics are used as a basis for decision-making concerning the consumption tax hike, national budgets, and other policies. Despite having such significance, statistical surveys are losing the public trust. The government should uncover the whole truth behind this unprecedented scandal.